Tuesday, July 14, 2009

Reinvigorating the American Brand, Part 3 of 20

American Jobs

We have taken outsourcing too far. The government needs to have better oversight of this. Powerful lobbyists have tipped the pendulum too far. There is an economic theory called creative destruction. This occurs when we invent something, maximize our benefit from the invention and eventually let it go when it’s no longer innovative or profitable for us to build in the US. Other countries at this point can take the technology and produce product more efficiently at a lower cost. If this is done right then we transition the industry over time to a more viable/innovative industry and American’s benefit because they get the same product at a lower cost. Because the move is gradual it gives our people enough time to make the transition and garner new skills needed. I’m over simplifying the theory but this is the drift of it. The problem now is that we are outsourcing at rates much faster than we had in the past. How does this happen? When companies assume a cost effective labor pool doesn’t exist at home. Where we have very low tech product it makes sense in certain areas to outsource. Because these products generally have been around for a long time there is typically heavy global competition. In order to compete with price you need to outsource to lower cost labor markets. Where I believe we have gone wrong is in highly innovative sectors where we assume the more mundane work is low tech. The work may be repetitive but it’s still innovative. And there are many American’s that would find these jobs viable careers. We also potentially give away trade secrets to countries that will easily take these and replicate and rebuilt at lower quality and cost thus exacerbating the issue. On the flip side we should be less concerned about letting foreign workers into the country. We mainly do this in two areas, low skilled labor and highly specialized labor. The low skill labor enables small business to operate competitively and efficiently. There are also less Americans willing to take these jobs. In the highly skilled areas we obtain knowledge in the US by allowing these individuals to come in. We are bringing them in generally for a skill we cannot find here. Therefore the organization gains knowledge versus lose knowledge. There tends to be a lot of fear in the country about allowing too many people in. We need to remember that this country was built on allowing people in. If you think about the country like a company then you know that surrounding yourself by brilliant people is healthy—this will be good for America. We will attract the brightest most diverse minds from around the world. We can all learn from these people. This is not a job killer for Americans. This is a job creator. We should be more concerned about what types of jobs we allow out and at what point. It’s not a simple problem and it’s one that won’t regulate itself. We need to be less naïve about what experts tell us. When we see jobs leaving that don’t make sense then we should put pressure on our representatives. Are the jobs leaving for the right reasons? Or are jobs leaving simply as a cost savings wrapped in a beautiful red bow of expert language that spins it into some other elusive, complex reason that nobody can understand.